News Potatoes

'Potato contract must change'

24 July 2018 - Niels van der Boom - 20 comments

Interest representative General Farmers Syndicate (ABS) has been trying for some time to give the potato grower more power when a contract is signed with the French fries producer. In years of shortages and high free market prices, growers bear the brunt of unread fine print. Potato foreman Guy Depraetere hopes that this year will make a difference.

ABS released a press release out with clear language. "A disaster is unfolding, which is affecting contract potato growers," the report reads. Factories should regard the general drought as force majeure, ABS argues. LTO Akkerbouw chairman Jaap van Wenum also left earlier know want to sit down with the factories.

Fine print
Guy Depraetere, national secretary of ABS, is realistic: "Farmers agree too easily to signing kilo contracts. If the contract cannot be delivered in full, and the factory has to buy expensive free potatoes, the grower will pay for this. That is literally stated." in the small print. Last year, that was also a problem. However, then the free potatoes were dirt cheap. Processors bought the necessary volume and you didn't hear anyone about it. This year is different."

Factories put pressure on signing contracts

Depraetere knows better than anyone how the game is played. "The factories have many fieldmen on the job who try to get the contracts signed as soon as possible," he says in unadulterated Flemish. "They sign without negotiation. Even when a grower can invoke force majeure, a way out is often found, for example by claiming that the crop has not been properly cared for because there are too many weeds."

hectare contracts
The advocate is fed up. "We have to move towards standard contracts per hectare instead of tons. New varieties such as Fontane deliver much more tons than the trusted Bintje. This means that 40 tons per hectare are quickly contracted, which is not always feasible. In the canning industry, the contracts for frozen vegetables are different. There the factory takes its loss when the harvest fails. If the harvest is above average, a lower price is paid. The whole is better balanced. It is usually better organized in the Netherlands too. Only the large growers with hundreds hectares are treated differently and pampered for processors."

Since March, in Belgium worked to 1 representative for the sector. The industry, in the form of Belgapom, is also involved in this. "We have to take action now," says Depraetere. "If we have to wait until the association is formed and it has this on the agenda, then we are a long way ahead. The factories sometimes mention that growers get money from the disaster fund and are compensated for the loss they suffer. It takes years before you get this money."

Little rained
ABS has every reason to sound the alarm. "Less than 10% of Belgian potatoes are irrigated", the potato man knows. "There is a lot of yield loss in the early varieties, although in certain regions it is possible to irrigate relatively much. The yields here are good, but you see a lot of crops that are failing now. Fontane is a relatively strong variety, which still shows potential. With high temperatures on the horizon, more and more potatoes are going to collapse."

"It is also dry in Wallonia and northern France, although it is possible to irrigate more in Picardy, for example," he says. "In Wallonia, these are relatively new potato growers. They have invested heavily in storage, but not in irrigation. It is difficult because a lot of work is done with leased land, which is very fragmented. The subdivision is also not ideal."

Even for those who can irrigate, the question is how long this is allowed. The Flemish government is talking about a national watering ban† For agriculture, the ban only applies between 08:00 and 20:00. The ban applies to both surface water and wells.

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Niels van der Boom

Niels van der Boom is a senior market specialist for arable crops at DCA Market Intelligence. He mainly makes analyses and market updates about the potato market. In columns he shares his sharp view on the arable sector and technology.
Comments
20 comments
Subscriber
Free Agria 24 July 2018
This is a response to this article:
[url=http://www.boerenbusiness.nl/aardappelen/artikelen/10879393/aardappelcontract-moet-veranderen][/url]
Potato contract does not have to change, growers have to change. Don't sell anything until you have something to sell. If you can't afford the risk of growing, don't grow.
Doctor 24 July 2018
That's how it is. Maybe a little less plants if you think the financial risk is too great
Subscriber
Free as a bird 24 July 2018
The English say; if can't stand the heat, get out of the kitchen!
How clear do you really want to be, I think.

In addition, LTO seems startled awake. They are now also finding out that the yield per hectare will be very disappointing. man, man,.......
Subscriber
Peer 24 July 2018
The English say; “If you can't stand the heat, get out of the kitchen!”
How clear do you really want to be, I think.

In addition, LTO seems startled awake. They are now also finding out that the yield per hectare will be very disappointing. man, man,.......
peta 24 July 2018
Completely abolish that security only for processors for a cheap raw material!! Potatoes are not a cheap raw material, but a quality product grown with care. I don't understand why LTO doesn't declare a minimum grower's price for this season of, for example, 30 cents. The EEC now allows this and if it applies to all processors it will be a level playing field in the market! If you see what is missing in the market, that is actually still a tip. For a portion of fries at the snack bar it saves just 3 cents per portion, in purchasing, so say 5 cents for the consumer. He thinks that is not so bad after all the reports about crop failures!!! Yes, that snack bar owner puts at least 40% on top!!! That's different than those farmers tips for millions of investments and risks!!!
peta 24 July 2018
Whether LTO can achieve this is highly questionable. Perhaps there are too many people with multiple hats on the LTO board and also on cooperative boards.
Pieper 24 July 2018
And so it is!
baby 24 July 2018
Why would you sell your potatoes before growing them, to minimize the risk or whatever.
Subscriber
mt 24 July 2018
We are just going on as slaves for the processors, no more, no less
peta 24 July 2018
bep wrote:
Why would you sell your potatoes before growing them, to minimize the risk or whatever.

Many just for the couch! Or for the lease companies!!!
That 30 cents mentioned by me is actually too low. Is only 16,5 on average over 2 years, a pittance for the processors, as a grower you are still short of fat for your risk coverage of the kilos you miss this year!
Einstein 24 July 2018
On average you go over 16,5 cents with a contract
Skirt 25 July 2018
You should be able to obtain a kind of right of 1st use of seed potatoes from a growers' organization for the French fries varieties through legislation, then the processor will always have to sit down with the growers.
Skirt 25 July 2018
The chip growers can organize themselves 'mandatorily' according to the Canadian model.
Canada 25 July 2018
kjol wrote:
The chip growers can organize themselves 'mandatorily' according to the Canadian model.



there the potato farmers are at least organized AND happy.
Here I have to deal with those people, but if the owl won't see...
Subscriber
willem 25 July 2018
contracts may have to change, but not this year. When the potatoes were 5 cents last year, we didn't hear them either. Just head up and don't squeak.
Subscriber
Telerx 25 July 2018
Lto suckers..Let drought declare disaster, and all contracts go in the trash..
Skirt 25 July 2018
You can think of everything about LTO, but the farmers put the signature.
Peter34 25 July 2018
This is a discussion that is timeless. Why is this discussion now being revived? Surely one cannot hope that the processors will cancel their agreements (uncertain coercion)?
Many processors have an agricultural/cooperative background. Is that perhaps why arable farmers surrender to them so easily/in confidence? The managers of the processors hardly have that background. They are business people: only profit, preferably in the short term, counts. As an agriculturalist, you are under no obligation to do so. Neither do seed potato farmers (discussion from last year). Growers can do just as well if French fries makers collectively refer to chain interest.
This discussion has nothing to do with the current situation. Is for the long term.
Farmer 25 July 2018
20 years back. 21 cents on April and 70-30 to inform the farmer. Why wouldn't that be possible anymore?
HOLLANDER 25 July 2018
guilder cents ?
Subscriber
freebooter 26 July 2018
OLLANDER wrote:
guilder cents ?

Then the poters cost 33 guilder cents and now 45 euro cents!!
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